Backburner for prize promotion law shake-up

Hopes have been dashed of early implementation of 2001’s radical proposals to simplify the law of prize draws and competitions.

Topic: Promotions

Who: The Depa

Who: The Department for Culture, Media and Sport (UK Government)

When: March 2002

Where: London

What Happened:

The UK Government published its long awaited white paper on gambling law reform under the smug title "A Safe Bet For Success". This followed the green tinged "Gambling Review Body" ("GRB") report which appeared in Summer 2001. The good news was the promise in the white paper to sweep away the current confusing array of legal restrictions affecting the advertising and promotion of gambling. The proposal was to replace it with a code of practice drawn up in consultation with the advertising and gambling industries. The bad news was that the clutch of radical proposals in the GRB report to scrap over-restrictive laws affecting prize promotions was kicked into touch. The GRB report had criticised various features of current law and practice as reported here on marketinglaw.co.uk. Where promoters of purchase-related draws provided an alternative free entry route, the report seriously questioned whether this was enough to make the promotion legal if nobody actually used the free route. It also described as "questionable" the legal status of prize draws using premium telephone lines. Although these currently accounted for a third of the UK's £280 million a year premium rate industry the report flagged up the fact that a significant proportion of all complaints received by ICSTIS (the premium rate telephone line watchdog) over the last four years related to telephone competitions.

Amongst the recommendations of the GRB report was the scrapping of the law criminalizing prize draws where a purchase had to be made in order to enter, doing away with the rule making it illegal to award prizes where anything other than 100% luck or 100% skill was needed to win, a new statutory definition of an illegal lottery so everybody knew where they stood, following New Zealand's example by simply legalizing prize draws where a purchase had to be made in order to enter, (provided the product price is the same whether or not it is linked to the draw), and doing away with arcane existing laws which ban prize competitions where "the outcome of a future event" has to be predicted.

So all seemed set fair for a major and beneficial overall of the laws in this area that promoters have been battling with for years.

In the event, however, the white paper ominously reports that following its consultation process it was "not satisfied that all of the potential issues had been fully identified". So, in place of a set of radical, 21st Century proposals breaking a new dawn for UK promotion marketing, there was a limp promise to "undertake a separate detailed review of prize competitions and similar products".

Given that even where the white paper makes concrete proposals it is not expected that these will become law for at least 2 or 3 years, it looks as though it will be some years yet before we see the end of the much unloved 1976 Lotteries and Amusements Act and the related common law of lotteries.

Why This Matters:

Currently, marketers are forced to spend " a great deal of time and ingenuity" (as the GRB put it in its report last year) inventing promotions that avoid illegal combinations of luck, skill, pay to enter or free to enter. It now appears that this situation will continue for some years yet. Good news for the lawyers perhaps, but not so good for promoters. Another area of concern, although again this is all back in the melting pot for some years, is the indication in the GRB report last year that a good move for consumer protection would be to ban altogether “stand alone" premium rate telephone line competitions which were not part of a product promotion. The industry has only recently tumbled to this proposal, but as already indicated, since the whole area is now going out in to separate review, it is perhaps premature to toll the bell for these increasingly popular money-making vehicles.